Dumas: The legislature's handout to utilities and corporations | Arkansas Blog

Tuesday, June 9, 2015

Dumas: The legislature's handout to utilities and corporations

Posted By on Tue, Jun 9, 2015 at 7:12 AM

click to enlarge LITTLE GUY PICKS UP TAB: Entergy wants to raise small customers' rates 13 percent to pay for this power plant near El Dorado. Rates for big customers would rise only 2 percent.
  • LITTLE GUY PICKS UP TAB: Entergy wants to raise small customers' rates 13 percent to pay for this power plant near El Dorado. Rates for big customers would rise only 2 percent.
Ernest Dumas this week uncovers another major giveaway to corporate Arkansas at the expense of average citizens in the form of sweetheart legislation for utility companies that will favor corporations over residential customers.

The legislation essentially mandates higher profits for utility companies, which means higher rates for customers — disproportionately higher for residential customers. Beneficiaries: Big industries such as Georgia Pacific, owned by the Koch brothers.

Credit Free Market Rep. Charlie Collins for sponsoring this legislation to put the thumb on the scales for corporations over people.

The prediction from Dumas is that this — along with Attorney General Leslie Rutledge's support by industrial contributors — likely signals the end of the attorney general's historic role as an advocate for the little guy. Her work so far on other regulatory issues has favored corporations over such populist notions as clean air and water.

This is important stuff about the shape of Arkansas's new political era. The people are being trickled upon.

Dumas' column:

Did I mention last week that the present General Assembly had earned the distinction of being the most corporate friendly in history and thereby the most hostile to Arkansas sons of toil?

I actually played it down. Unmentioned was a little noticed act, signed by Gov. Hutchinson in late March, that seeks to force the state Public Service Commission to raise utility rates to give investors higher profits than they’ve gotten in Arkansas and to shift electricity costs from giant energy users like steel and paper mills and big poultry processors like Tyson to homeowners and smaller commercial users.

You’ll understand it much better next year when the PSC approves higher rates for Entergy Corp. and transfers electricity costs from big electricity consumers like the Koch brothers’ Georgia Pacific Corp. to you.

One bit of evidence for this legislature’s distinction as the friendliest to the Fortune 500 was that the legislature voted last month to borrow $87.1 million to bolster Lockheed Martin’s profits and chances of landing another big military contract and then pay off the Lockheed debt with some 120 million of your tax dollars. Lockheed, with $46 billion in sales and $5.2 billion in profits last year, gets 82 percent of its revenues from Uncle Sam, making it one of the largest beneficiaries of Big Government and now of Little Government as well.

Two months earlier, the legislature approved an amendment to the state Constitution to remove the limits on this kind of corporate welfare and permit future legislatures and local governments to obligate as much of Arkansas’s taxes as they like—all of it, if they chose—to corporations that would like to operate out of Arkansas. The amendment also will end the 140-year-old constitutional ban on cities appropriating your tax money to corporations like chambers of commerce for advocating business development.

But this is about the legislature and your utility bills.

Rep. Charlie Collins, the Republican chairman of the House Insurance and Commerce Committee, introduced the utility bill, “An Act to Reform Rate Making of Public Utilities,” and it passed without a dissenting vote, although a few House members took a powder and didn’t vote.

Its “reforms” were two directives to the state utility commission:

• From now on, when the commissioners consider a proper rate of return on a utility company’s common equity—the stock held by its investors—they must weigh all the factors and evidence submitted by the company and intervening parties, such as what other states in the region allow utilities to earn, and then in their final order the commissioners must explain how much weight they gave that testimony. Hint: Arkansas has allowed utilities a lower rate of return than the likes of Texas, Kansas and Oklahoma and its retail rates are lower. The legislature and the governor now tell the commissioners they can no longer ignore those factors. You can guess what the result will be.

• The new law, Act 725, reverses the historical bent of the utility commission to favor homeowners and small business users in the competition with large industrials over how a utility’s costs and revenues are to be allocated among the classes of customers. Starting now, the utility commission is directed to give extra weight to the needs of big energy-consuming industries for low rates on the ground that shifting costs from the big consumers to homeowners and small commercial users will mean more jobs.

Entergy Corp. has applied to the PSC for a rate increase, which will reflect its purchase of a unit of the big gas-fired generating plant at El Dorado and also the need for a higher return on equity than it has historically been given. Last week, its official notice in the classified section of the Arkansas Democrat Gazette broke down the impact of $167 million in new annual revenue from its customers. Residential rates and small commercial rates would go up more than 13 percent but big industrial users less than 2 percent.

In the past, the PSC staff, the attorney general and eventually the commission itself have always favored homeowners in the allocation of costs and Arkansas Electric Energy Consumers, a consortium of big energy users like the big steel and paper mills, oil companies, Riceland Foods, Acme Brick and Tyson Foods, was left to plead with the commission to soften the impact on the big industries monthly bills.

Act 725 reverses the policy. Now the PSC must favor big industrials, if the utility or other interveners make the case that it would be good for jobs, but it can soften the rate impact on homeowners and businesses if someone can plead their case like the consortium did for the biggies. The attorney general has been the ratepayers’ advocate in these cases for 50 years, but the new attorney general, Leslie Rutledge, has taken the side of the Koch brothers, who supported her campaign, and other industrial polluters against President Obama’s clean-power plan. Can she switch and become a champion of ordinary ratepayers over her benefactors? Wait and see.

The justification for favoring big industries over everyone else in fixing monthly electric bills—along with any policy on anything that anyone favors today—is that it would be good for jobs. Acknowledging Act 725’s injunction, an Entergy executive filed testimony in the case saying that, yes, favorable energy rates for big plants and less favorable rates for other businesses and homeowners would indeed be good for jobs.

If she chose, Rutledge or anyone else might use federal job records and projections to show the opposite is true: job numbers come from small businesses, not big manufacturers. But in the new regime formed by massive political contributions from corporate wealth, facts must not get in the way of policy.

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